Bookkeeping clear up

I am a bookkeeper, have been for centuries, and i love my work. I fully understand the importance of tidy and accurate accounts and my workplace and my accounts reflects this. I currently use Sage L50 and am very good on it.

The small company (4 staff) next door to where I work run on Sage Instant. None of them are accounts trained, they truly do not have a clue. They do the basics of inputting customer and supplier invoices and running petty cash very well, but for everything else - bank account, credit card account, journals, month end etc - doesn't get done. Needless to say their Sage is in a right mess and always has been.

The Accountant that they pay to do their accounts doesn't seem like he wants to improve things - they still have outstanding debtor and creditor transactions on there from years ago which have never been rectified or cleared off, they have never had a bank rec done, etc. I hate to think how abysmal the P&L looks! It seems as though all the while they are struggling, it suits him as he makes extra money out of it.

I think you get the picture.

I have offered to clean up their Accounts, from the beginning of last financial year to date (financial year is either march - feb, or april - march, I forget right now). Thankfully, they have accepted my offer of help. I have told them that i need an audited trial balance from the end of the previous financial year (ending feb/march 09), as well as audited outstanding customer and supplier transactions, and bank and credit card statements for the whole of last financial year (09-10).

My thinking is that the accounts, whatever state they are in from feb/march 2009 backwards, should be wiped off the system. The data on their Sage is useless and nothing accurate can be pulled from it, plus the Accountant must have the accurate data.

So my question is, can I archive / delete the previous years' worth of rubbish, just starting with 09/10 financial year? Theoretically, if i wipe it clean, input the opening balances as per the audited TB then re-enter the 09/10 transactions, plus all the additional things that they are missing like depn etc, it will get me to an accurate end-point.

Oh another question, if i archive, don't i have to run year-end? This will no doubt throw up a whole load of errors? I really think that wiping Sage clean and starting again from scratch would be the better option.

I have to wipe and start again because of data-corruption (don't ask - interfering managers who think they know best). Sage was able to get the program 'going' but wiped out lots of transactions in the process so on discussion with our auditors we decided to wipe it clean. It will save you loads of time and maintain your will to live. I would keep a back up of the existing data somewhere - you never know when you might need it, when you have that pull the plug and go for it.

Of course you have to use the accountants' trial balance but is it really accurate?

From what you say I would suspect that there may be plenty of debtors and creditors wrong - I would want to know the difference between the reality transactions and the accountants' transactions and consider altering the accountants' trial balance to the correct trial balance on the 1st day of the new year.

You can only start with the Opening Balances per Accountants TB. Adjustments to debtors and creditors can only be done during the current year, either writing off or introducing the debtor or creditor. I would write off or on in this years sales purchases etc, not put it to bad debts, because the previous year/s were incorrect. May make the current years comparison to last year look incorrect but it explainable.

Only has to be done once, I have had to do this, its time consuming but a great sense of satisfaction knowing the client has meaningful debtors, creditors and bank figures and balances to work with, and are all correct and can be used correctly (hopefully) from that point.

To ghewitt: how do i wipe clean? presumably it is "delete company"? Or can you archive without completing year end? or is it some other way?

To peter: without going through all the accounts since day 1, surely i have to go via the published & audited accounts from financial year 08-09? it's the only thing i have to rely upon, even though it may not be accurate.

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I guess I'd firstly have to print the detailed audit trail from feb/mar 09 onwards, backup, wipe clean, enter the opening figures from the TB, then re-enter the details from the printed audit trail (but correctly entered this time). Is that right?

Yes from what you say wipping it clean and starting again does seem your best option.

However, you say that these people 'do the basics of inputting customer and supplier invoices and running petty cash very well', so why waste your time reinputting all of this?

You can export their entire audit trail as a .CSV file which can be read by Excel. You then delete out of excel anything you dont want to keep (ie bank transactions if you don't trust them) then start with a clean Sage and import the .CSV file back in. this then only leaves you to reinput the Bank account for the year and reconcile it. The following transaction types will be imported: PI, PA, SI, SA, BP, BR etc. but NOT SR or PP

If you do trust the bank enteries for customers and suppliers (ie SR and PP on the audit trail) then you MUST change these to SA and PA on the excel sheet before you import the audit trail to Sage. These will then show as Payment on Account in Sage and will need to be matched against the invoices.

I've used this method dozens of times to rebuild a clients data. If you need any help with it email me at witch@witch-queen.com and I will reply with my phone number.

-- Witch-Queen

PS: just seen your replies to the other posters, if you want to ring me for help please do so.

Although they appear to input customer and supplier invoices with ease, I suspect there may be some errors there too. For instance they do not know about prepayments, so all the business rates go into one month, not proportionally across the entire year.

I think that to save confusion I should wipe the lot and start from new. It's a long task but it will be worthwhile in the end.

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Their (seemingly useless) Accountant has emailed them a 12-page list of bank mismatches which they are currently investigating - but they don't know how to resolve them!

The confusing thing is they've been trading for 5+ years, and they've never been able to utilise the financial reports nor had a bank account that fully recs.....how can anyone trade like that?!

Can't wait til they give me the reports requested and the laptop so i can make a start.

Hi, While yr waiting for other info it could be worth asking suppliers for historical information, just a few accounts that look like they may be problem areas - that way you have some outside information for reconcilation purpose.

Would be interesting to know if this info ties into accountants info at all.

"To peter: without going through all the accounts since day 1, surely i have to go via the published & audited accounts from financial year 08-09? it's the only thing i have to rely upon, even though it may not be accurate."

The audited accounts are the starting point. If you have an invoice that is outstanding per the audited accounts but is not outstanding in reality then you have to correct that in 09-10.

If journals have not been done to get accruals and prepayments correct in previous periods you should need to start doing them in 09-10. It's unlikely you need the information for previous years but if accurate management accounts are needed in previous years then adjustments can be made via spreadsheet.

You could re-install Sage as a custom set up. Call the file something like C:\newsage. You will then have a completely new version of Sage and still have the old Sage available should it be required. You can then input the opening balances from the accounts.

If you think the codes, COA , Suppliers , Customers extra are set up correctly you can use rebuild and that will start you from the beginning Keeping all your suppliers and customers details and clear any entries out . You will find this in the File Maintenance ( Please take a backup first.)

Just tick the information you would like to keep.

I had a similar client and we reconstructed the Debtors and Credtors on the basis that they kept a good purchase statement file and paid on statement and a fairly accurate info on the lodgement book . We used the information from the Bank Statements , Chq books and Lodgement Books and reconstructed the Debtors and Creditors almost 98% correctly. It was a exercise but we talking a two million turnover so the exercise had to be done.

And yes you do have to have your opening balances agreeing to the Audit records , but if you can show the accountant were the differences are they should take them into account the following year.

"And yes you do have to have your opening balances agreeing to the Audit records , but if you can show the

accountant were the differences are it should take them into account the following year."

Yes, this is vital. If you don't I am sure your customers and suppliers won't accept what your accountant has used if their balance is more favourable to your client so you may as well ensure that less favourable balances are corrected.